Taiwan Targets SMIC for Allegedly Luring Engineers Through Fake Company

Taiwanese officials are probing whether China’s top chip maker, SMIC, has hired Taiwanese engineers illegally using a front firm masquerading as a Samoan company. Taiwan has been stepping up efforts to keep Chinese companies from supposedly stealing technology and poaching talent at home, frequently using phantom firms, as the island nation continues to be a world leader in chip production.

SMIC set up a Taiwanese subsidiary in the name of a Samoan firm to recruit engineers, Taiwan’s justice ministry’s investigation bureau reported. The bureau said the company was based in Hsinchu County, just outside Hsinchu City, where the world’s largest contract chipmaker, TSMC, is based. But nothing more was disclosed.

SMIC has been increasing its capacity for production to support China’s semiconductor sector in the face of tight U.S. export controls. The firm has not commented on the probe so far.

Earlier this month, the bureau sent 180 staff to raid 11 firms accused of similar illicit recruitment tactics, including SMIC. The raids involved searches at 34 addresses and interviews with 90 people. Since starting a task force on the topic in 2020, authorities have probed more than 100 such cases.

“The high-tech sector is the lifeblood of our country’s economy, and enterprises with semiconductor technology and the corresponding industrial chain are the ‘mountains guarding the country’ to ensure our economic power,” the bureau said. “Talents in the corresponding industries have therefore become the object of poaching by Chinese companies.”

The authorities assert that most Chinese companies trying to recruit Taiwanese engineers present themselves as domestic or overseas enterprises. Such entities allegedly engage in illegal headhunting practices, cooperate with domestic recruitment agencies, or even open clandestine offices to stay undercover.